The Japanese government is planning to distribute 50,000 yen ($351) each to low-income households as part of a relief package to mitigate the blow from accelerating inflation, sources familiar with the matter said Tuesday.
Households that are exempt from resident taxes will be eligible to receive the money, the sources said, as they are seen as more vulnerable than others to higher energy and food prices largely caused by Russia's war against Ukraine.
The government is considering tapping reserve funds in the state budget for the current fiscal year from April for the distribution program, which will likely cost around 900 billion yen, the sources said.
Reserve funds are allocated for use in emergency situations. The government can decide how the money will be used without parliamentary approval and scrutiny by opposition parties.
Japan has seen inflation picking up in recent months, albeit at a more moderate pace than in the United States or some European nations. But broadening price hikes are threatening to cool consumer sentiment when wage growth is still tepid and the economic recovery from the COVID-19 fallout has been relatively slow.
Hit by a drop in public support, Prime Minister Fumio Kishida has instructed officials to draw up additional steps for consumers, and a relief package is expected to be unveiled on Friday.
The government will continue to give subsidies to oil wholesalers to lower retail gasoline prices beyond September to the end of this year, and limit the rise in the price of imported wheat it sells to millers.
Cash handouts are often used by the government to extend visible support to voters. The government set aside some 204.2 billion yen in the current business year to distribute 50,000 yen per child to low-income, single-parent households and child-rearing households exempt from paying resident taxes.
In the midst of the COVID-19 pandemic, the government secured funds to give 100,000 yen each to low-income households in an extra budget for the previous fiscal year that ended in March.